Synthesis of the Brazilian Economy

BRAZIL ECONOMICS - Report 26 Feb 2024 by Affonso Pastore, Cristina Pinotti, Paula Magalhães and Diego Brandao

OVERVIEW

Despite the Carnival holiday, the political tension has remained high in February, involving decisions by Supreme Court Justice Dias Toffoli; the crisis in the relations with Israel provoked by Lula; and the operation by the Federal Police to investigate the scope and responsibility for the attempted coup of January 8th, 2023 by Bolsonaro and his followers. On the economic front, the fiscal stimuli have been keeping the job market heated, with signs (albeit incipient) of contamination of inflation in sectors more closely correlated with the economic cycle, such as underlying services, in one more turn of the screw of the fiscal-monetary conflict.

DECISIONS OF DIAS TOFFOLI

In his eagerness to please President Lula after having issued single-judge decisions injunctively suspending the payment of fines to the federal government by J&F and Odebrecht, Dias Toffoli urged the opening of an investigation of Transparency International after disclosure of its annual Corruption Perceptions Index (CPI) for 2023, in which Brazil fell by 10 places to 104th in the world ranking, with a score of 36/100, significantly below the global average (43), and the ranking of other Latin American countries, such as Uruguay (76), Chile (66), Cuba (42) and Argentina (37). The probe is based on allegation of appropriation by the NGO of money obtained by the government via leniency agreements stemming from Operation Car Wash, an allegation that had been rejected by the Office of the Attorney General (PGR) in 2020. The situation can be described in a nutshell by an old dictum: shaking down the thermometer does not lower the fever that is hampering Brazil’s economic, political and social improvement.

Toffoli’s judicial activism brought expressions of dismay from some of the Court’s other justices, as well as a formal protest from Attorney General Paulo Gonet against the decisions involving J&F and Odebrecht, which are subject to en banc reconsideration.

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